Gold to be Overvalued?

Gold to be Overvalued?

Gold to be Overvalued?

Good Morning Traders

Asian equities traded higher across the board in sympathy with Wall Street whereby an uptick in energy prices supported sentiment

•             A lack of tier 1 data and key speakers kept trade muted and most major pairs flat during the Asia session

•             Looking ahead, highlights include US Challenger Job Cuts, ECB Monetary Policy Minutes, US Initial Jobless Claims and Draghi (Dove), Coeure (Dove) and Praet (Sofe Dove) all speak

 

ASIA

Asian equity markets took the impetus from a positive Wall St. lead where the energy sector was lifted as WTI crude prices rose towards the USD 50.00/bbl level following the unexpected drawdown in DOE crude oil inventories. This resulted in outperformance of oil names in ASX 200 (+0.5%), while Nikkei 225 (+0.6%) was buoyed by a weaker JPY after USD/JPY surged above 103.00. KOSPI (+0.4%) was led higher as index heavyweight Samsung Electronics rose to record high after the company said it would review proposals by Elliott Management for capital return, restructuring and a US listing, while Hang Seng (+0.5%) conformed to the upbeat sentiment across global equity markets in what was a relatively uneventful trading session with China remaining shut for Golden Week.

EUROPE & UNITED KINGDOM

UK Chancellor Hammond said wants Brexit deal which allows financial services access to the European market.

In Germany, the Grand Coalition has agreed in principle to EUR 6.3bln of tax reliefs for German citizens. (Handelsblatt)

 

FX

A lack of tier 1 data and key speakers kept trade muted and most major pairs flat during the Asia session. This resulted in EUR/USD remaining around 1.1200 and GBP/USD languishing near 31-year lows. AUD/USD failed to be inspired by the narrowest trade deficit in 4 months as the pair tested 0.7600 to the downside amid selling in AUD/NZD, while USD/JPY saw mild profit taking from yesterday’s surge above 103.00.

 

COMMODITIES

WTI crude futures saw profit-taking overnight after prices surged towards the USD 50.00/bbl in the prior session on an unexpected DOE crude inventory drawdown. Elsewhere, Gold (-0.1%) prices remained near post-Brexit lows with trade subdued as participants now look ahead to Friday’s US NFP data and its implications on Fed hike expectations, while copper traded sideways in tandem with most asset classes seen during today’s Asia session.

Algerian Energy Minister has stated that OPEC and Non-OPEC countries plan to meet informally from 8-13 October in order to discuss implementing the Algiers deal.

Venezuela Oil Minister Del Pino says the country and other producers are to meet in Istanbul to discuss output on October 12th.

Deutsche Bank said that the Gold slump is just the beginning and that they see Gold to be 20-25% overvalued.

 

U.S

Fed Vice Chair Fischer (Voter, Neutral) said that there is evidence that the natural rate of interest has dropped which is a concern, while he added that ultra-low interest rates may reflect more than cyclical forces and are an indication growth potential may have dimmed significantly.

Fed's Lacker (Non-Voter, Hawk) says there are slim chances for negative rates in the US and that rates should increase when close to inflation target. Furthermore, Lacker also reiterated that there is a strong case to raise rates more rapidly.

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